Sale of A123 to Chinese company could harm national defense, congressional delegation from Michigan says

An A123 Systems Inc. logo is seen in Livonia, Mich. in this photo taken Thursday, Aug. 6, 2010, The first wave of mass-produced advanced batteries funded by the Obama administration's recovery program are starting to roll off assembly lines, setting the stage for new hybrid and electric vehicles.

DETROIT, MI - A bipartisan U.S. congressional delegation from Michigan has sent a letter to Treasury Secretary Timothy Geithner, expressing concern over a potential bankruptcy sale of lithium-ion battery maker A123 Systems to a Chinese company.

Massachusetts-based A123, which has lithium ion battery manufacturing plants in Romulus and Livonia, filed for bankruptcy protection last month. Earlier this month, a Delaware judge gave final approval for a $50 million in bankruptcy financing from Chinese auto-parts maker Wanxiang Group.

Auto-parts company Johnson Controls has offered $125 million for A123’s automotive assets, which the Detroit Free Press reports that Wanxiang is also interested in. Bids on A123’s assets are due Dec. 4.

The letter to Geithner, signed by 13 congressional delegates, such as Sen. Carl Levin (D), Sen. Debbie Stabenow (D) and Rep. Bill Huizenga (R), states, “A123 has developed cutting-edge battery technology that is integrated into all facets of its business, including its defense, electric grid, telecommunications, and automotive sectors. This raises concerns about the potential effect on U.S. national security by the transaction in question.”

Saying that preserving intellectual property and manufacturing skills is critical to the country’s national defense, the letter adds, “…and in light of ongoing Chinese attacks on critical infrastructure in the United States, we believe it prudent that (the Committee on Foreign Investment in the United States) examine Wanxiang’s bid with the utmost scrutiny.”

The letter goes on to question how connected Wanxiang is to the Chinese government’s military, saying that little public information is available on the company.

The letter also expresses concern over a foreign company getting U.S. Taxpayer assistance. That worry stems from the fact that A123 was given significant aid by U.S. federal and state governments.

A123’s bankruptcy is seen as a massive failure just three years after the federal government approved a $249 million grant for the company, and the state of Michigan offered it tens of millions of dollars in tax incentives.

A123 has drawn about $132 million so far from the federal grant, according to the Department of Energy. The grant money had to be matched by the company as it was used. The company was also given a $6 million grant in 2007.